Air ticket prices likely to climb by 30-40% during the peak travel season

MUMBAI: If you leave it too late to book your tickets for Christmas and New Year holidays, it could burn a hole in your pocket.

Ticket prices are likely to climb by 30-40% during the peak travel season a few weeks away, travel trade analysts say. Buoyant demand, a reduction in the number of flights and infrastructure snafus at the two major metro airports, Delhi and Mumbai — which handle more than 60% of the total domestic traffic — are pushing fares up.

Ticket prices on the international sectors have also gone up by 15-20% as some international airlines have reduced the number of flights into the country. Airline officials say that media reports of fares spiking 100% are exaggerated though this could happen in a few cases.

"Airfares are dynamic and it all depends on the demand. Having said that, if you wait till the last minute to book your airline seat, you may end up paying between 30 and 40% more than in a normal situation. It is about planning your trip wisely," said Karan Anand, head, relationship and supplier management, Cox and Kings.

But airline officials don't see an alarming trend in the fare pattern. They say fares are bound to go up at certain times of the year. "Fares are going up only because the demand has increased a lot. More traffic is coming to low cost carriers (LCCs)," said Kaushik Khona, CEO of GoAir, an airline which is part of the Nusli Wadia Group.

"This is the peak season and demand is high, so fares will climb anyway. But we do not see a demand and supply issue coming out of repairs at Mumbai airport because the flights we are operating remain the same," said Neil Mills, CEO, SpiceJet, the low cost carrier that was recently acquired by media tycoon Kalanithi Maran.

After two dull years, because of terrorist attacks in 2008 and the economic downturn, the airlines are now witnessing loads — the percentage of seats occupied — of about 80% and on some sectors up to 90%.

The last couple of years saw loads not more than the high 60s, according to aviation experts. This is the reason why airlines not only weaned capacity of up to 20% during this period, but also deferred deliveries. Also, the impact of grounding of some aircraft by two major carriers like Kingfisher Airlines (12) and Air India (40) is now surfacing in the wake of perked demand, say experts.

Aviation analysts say demand for the October to December quarter will be 15-20% higher than the July-September period, driving up yield per seat by as much as 30%. "The average load factors are expected to be 80% because of the holiday season demand though this will be constrained a bit due to runway repairs at Mumbai airport, the second-largest airport in the country," said Amber Dubey, director (aerospace and defence), KPMG. The aviation expert feels high fare levels will even out by end of January and the average domestic capacity will be around 10-15% for the year.

According to sources, Mumbai airport is handling 240 flights less per day post the repair job started, using only a little above 60% of its capacity. Though the airport says its aircraft movements are about 698 per day.

The so-called dynamic yield management system used by airlines is also responsible for the fares going up for the last few seats. In case of major sectors like Delhi and Mumbai, the difference in fares for the last few seats can be anything between 15 and 121% higher. (See Table) This is the reason why travel trade experts say it is a good idea to book well in advance for the Christmas week.

"We can expect fares for this week to be higher by 20%," said Ajay Prakash of Travel Agents Federation of India. But an addition of capacity by foreign airlines back into the system might help level international fares soon. "With Swiss International Airlines, Austrian and some other international carriers reinstating capacity that they had pulled out, we expect the capacity to improve," Mr Anand said.